Legal News

Florida Hedge Funder the Big Loser in Rothstein Scheme

By Ashby Jones

By now, we know quite a bit about how Fort Lauderdale attorney and alleged Ponzi schemer Scott Rothstein spent his money. The picture has, to date, been less clear, however, in regard to how he brought in the money he ultimately spent.

But a big part of the mystery became clearer when we read this piece earlier Friday in the Miami Herald.

Wealthy Fort Lauderdale investor George Levin and his Banyon hedge funds sank $775 million into Scott Rothstein’s supposed legal-settlement deals. That accounted for most of the money sucked into the lawyer’s massive Ponzi scheme. Click here for the list of creditors, filed in federal bankruptcy court in Miami earlier this week.

Banyon’s investments helped push Rothstein’s settlement sales beyond $1 billion before his financial scam collapsed in late October.

Banyon’s five funds are among the 20 largest creditors with claims against Rothstein, according to bankruptcy trustee Herbert Stettin.

Rothstein, 47, was charged Tuesday with federal racketeering, money laundering and fraud charges in the largest investment scam in South Florida history — amounting to $1.2 billion. The U.S. attorney’s office is investigating Rothstein and his fabricated employment-settlement deals along with associates in and outside his law firm who may have conspired with him. Click here for other LB coverage of the Rothstein saga.

Full post as published by Law Blog - WSJ.com on December 04, 2009 (boomark / email).